South Africa’s next Eskom CEO ignores coal at their peril – Bayoglu

His departure as CEO is “not a question of personality” Bayoglu says. The problem was that De Ruyter listened to advisers who told him that solar and wind power were the way forward. “If he knew the generation business he wouldn’t have done that. He didn’t fix the coal-fired power stations.”

Menar is a private firm with investments in anthracite, coal, gold, manganese and nickel projects. Bayoglu is also a non-executive director of South Africa’s Richards Bay coal terminal.

De Ruyter, who said in December that he is standing down, remains in post until March 31 while a successor is sought. Calib Cassim, Eskom’s chief financial officer, said on December 23 that the company needs an overhaul of its tariffs to ensure long-term financial viability, and that the issue of overdue debt owed by municipalities must be resolved.

A decision on prices from energy regulator Nersa is due on January 12 and a government debt relief solution is expected in February.

Bayoglu argues that limitations on battery storage capability means that in South Africa, renewable energy sources need to be combined with either nuclear, gas or coal to provide reliable supply. The country doesn’t have access to nuclear or gas, leaving coal as the only viable option, he says. “The solution is not investing in renewables. It’s baseload generation.”

The Eskom job needs “a person with a generation background,” Bayoglu says. “You don’t employ a lawyer to run Anglo American. This is not a small-scale business where it is OK to fail.”

Qualified Audit

De Ruyter argued in November that keeping South Africa reliant on coal just because it happens to have the resources is like wanting to stay in the stone age because there are lots of stones. He also claimed that coal is a source of profit for organised crime. Solar and wind power, he argued “cannot be stolen.”

They “cannot be exported to China, beneficiated there, and then be sold back to us.” Organised gangs, he said, steal billions of rand from Eskom every year.

Eskom’s auditors, Deloitte & Touche, on December 23 gave a qualified audit opinion and said there was “material uncertainty relating to Eskom’s ability to continue as a going concern”.  The auditors cited “irregular expenditure, fruitless and wasteful expenditure and losses due to criminal conduct.”

Analysts have questioned whether qualified candidates would be willing to come and accept the kind of political pressure that De Ruyter worked under. While he was still CEO, minister for mineral resources and energy Gwede Mantashe accused him of “actively agitating for the overthrow of the state” by deliberately allowing load shedding. President Cyril Ramaphosa did not publicly intervene.

De Ruyter went into the job knowing that there would be political pressure, says Bayoglu,  adding that Mantashe’s comment was “not necessary. What would a minister know about power generation?”

One of Mantashe’s complaints was that De Ruyter, who has an MBA and legal qualifications, lacks technical expertise. The former CEO “didn’t have the background and experience and neither does the minister,” Bayoglu says.

There are “good candidates” for the position in South Africa and around the world, Bayoglu says, though without naming any who might realistically be persuaded to take the job.

Bottom Line

Having undermined De Ruyter, the onus is on the government to find someone better.